Revision as of 22:34, 7 October 2010

SELLER-ASSISTED MARKETING (FRANCHISE/BUSINESS OPPORTUNITIES)

Defines seller-assisted marketing plans as any sale or lease or offer to sell or lease any product, equipment, supplies or services which require a total initial payment (investment) exceeding $500, but less than $50,000 to begin, maintain or operate a business.

The Federal Trade Commission requires a franchise or business opportunity seller provide the purchaser a detailed disclosure document at least 10 business days before the purchaser pays any money or legally commits to a purchase. The document provides important information about the business, including:

The names, addresses, and telephone numbers of other purchasers

A fully-audited financial statement of the seller

The background and experience of the business' key executives

The cost required to start and maintain the business

The responsibilities the purchaser and the seller have to each other once the transaction is completed

Requirements for seller-assisted marketing plans include filing a disclosure statement with the California Secretary of State and providing a list of names and addresses of sellers to Be updated whenever material changes occur, but at least once a year. The list of sales people is to be updated every 6 months.

See (California Civil Code Section 1812.205) for requirements relative to written disclosure statement by the seller to potential purchaser. Some advertisers require a disclosure statement be on file.

Franchise/seller-assisted marketing requires registration with the Secretary of State.